Palantir Technologies Inc. (NASDAQ: PLTR)

Palantir’s Q2 2025 results represent a watershed moment for the company, crossing the $1 billion quarterly revenue threshold for the first time with total revenue of $1.004 billion, representing 48% year-over-year growth and 14% sequential growth. This exceptional performance was driven by the company’s artificial intelligence platform (AIP) and its ability to deliver transformative outcomes for customers across both commercial and government sectors.

Operating leverage was particularly impressive, with GAAP operating income of $269 million representing a 27% margin, while adjusted operating income reached $464 million for a remarkable 46% margin. This demonstrates Palantir’s ability to scale its software platform efficiently while maintaining industry-leading profitability levels. The company’s focus on high-value, mission-critical applications continues to command premium pricing and drive exceptional margins.

Cash generation remained robust with cash from operations of $539 million (54% margin) and adjusted free cash flow of $569 million (57% margin). This substantial cash generation provides Palantir with significant strategic flexibility to invest in growth initiatives, pursue acquisitions, and return capital to shareholders. The company’s balance sheet strength is further demonstrated by its $6.0 billion in cash, cash equivalents, and short-term U.S. Treasury securities.

The company’s Rule of 40 score of 94% once again obliterated this key SaaS metric, combining 48% revenue growth with a 46% adjusted operating margin. This performance places Palantir in an elite category of software companies that can deliver both rapid growth and exceptional profitability simultaneously, underscoring the unique value proposition of its AI-powered data analytics platform.

Earnings per share performance was equally strong, with GAAP EPS of $0.13 and adjusted EPS of $0.16, reflecting the company’s continued focus on profitable growth. The strong financial performance across all key metrics validates Palantir’s strategic positioning at the intersection of artificial intelligence and mission-critical enterprise applications.

U.S. Commercial delivered the most spectacular performance with 93% year-over-year growth to $306 million, representing 20% sequential growth. This explosive growth is driven by the rapid adoption of Palantir’s Artificial Intelligence Platform (AIP), which is enabling enterprise customers to operationalize AI at scale. The segment’s performance demonstrates the transformative impact of AIP in helping commercial customers unlock value from their data and automate complex decision-making processes.

The U.S. commercial segment’s record-setting $843 million in Total Contract Value (TCV), up 222% year-over-year, indicates strong future revenue visibility and customer commitment. Remaining Deal Value (RDV) of $2.79 billion, up 145% year-over-year and 20% quarter-over-quarter, provides substantial contracted revenue backlog that supports continued growth momentum.

U.S. Government maintained strong growth with 53% year-over-year increase to $426 million, reflecting 14% sequential growth. This performance underscores Palantir’s continued relevance in supporting critical government missions, from defense and intelligence to civilian agencies. The government segment benefits from long-term contracts and mission-critical applications that are difficult to replace, providing revenue stability and predictability.

Government customers continue to rely on Palantir for their most sensitive and complex analytical challenges, including national security, defense planning, and emergency response. The segment’s growth reflects both expansion within existing agencies and adoption by new government customers seeking to modernize their data infrastructure and analytical capabilities.

International revenue grew 15% year-over-year to $271 million with 6% sequential growth. While international growth has been more measured compared to the U.S. business, the segment represents significant long-term opportunity as Palantir expands its footprint in allied nations and builds relationships with international commercial customers. The international business provides geographic diversification and access to large government and commercial markets outside the United States.

The segment mix continues to evolve favorably, with the high-growth U.S. commercial business representing an increasing portion of total revenue. This shift toward commercial revenue is strategically beneficial, as commercial customers typically have shorter sales cycles, higher expansion rates, and less regulatory complexity compared to government contracts.

Total Contract Value (TCV) reached a record-setting $2.27 billion in Q2 2025, representing 140% year-over-year growth. This exceptional performance demonstrates the increasing value and strategic importance of Palantir’s platform to its customers. The substantial increase in TCV reflects both the expansion of existing customer relationships and the addition of new customers who are committing to significant long-term contracts.

Deal activity was particularly robust, with 157 deals of at least $1 million, 66 deals of at least $5 million, and 42 deals of at least $10 million closed during the quarter. This deal composition indicates that Palantir is successfully landing large, enterprise-scale engagements that provide substantial revenue and expansion opportunities. The prevalence of multi-million-dollar deals demonstrates the mission-critical nature of Palantir’s solutions and customers’ willingness to make significant investments in the platform.

Customer Count grew 43% year-over-year and 10% quarter-over-quarter, indicating healthy customer acquisition across all segments. This growth in customer base, combined with increasing deal sizes, demonstrates Palantir’s ability to both acquire new customers and expand relationships with existing ones. The combination of new customer wins and account expansion drives the company’s sustained growth trajectory.

The U.S. commercial segment’s Remaining Deal Value (RDV) of $2.79 billion, up 145% year-over-year, provides substantial revenue visibility and supports continued strong growth in this key segment. RDV represents contracted future revenue that provides predictability and supports investment in growth initiatives. The strong RDV growth indicates that commercial customers are making long-term commitments to the Palantir platform as a strategic asset.

These metrics collectively demonstrate Palantir’s ability to win large, strategic engagements with customers who view the platform as essential to their operations. The increasing deal sizes and contract values reflect the expanding scope of Palantir’s solutions and their growing importance to customer success. This positions the company for continued strong growth as these contracted revenues convert to recognized revenue over time.

Palantir’s Artificial Intelligence Platform (AIP) continues to be the primary driver of the company’s exceptional growth, particularly in the commercial sector. AIP represents a paradigm shift in how enterprises can operationalize artificial intelligence, moving beyond experimental AI projects to production-ready applications that deliver measurable business impact.

AIP Commercial Adoption

• Enterprise Transformation: AIP is enabling commercial customers to fundamentally transform their operations by integrating AI into critical business processes
• Rapid Deployment: The platform’s ability to deliver value quickly is driving the 93% growth in U.S. commercial revenue
• Scalable AI Solutions: AIP allows customers to scale AI applications across their organization without requiring specialized AI expertise
• Data Integration: The platform’s strength in integrating disparate data sources provides a comprehensive foundation for AI applications

The commercial success of AIP demonstrates Palantir’s unique position in the AI market. Unlike point solutions or generic AI tools, AIP provides an integrated platform that connects data, models, and decision-making processes in a secure, scalable environment. This comprehensive approach is resonating strongly with enterprise customers who need production-ready AI solutions rather than experimental tools.

Government AI Applications

• Mission-Critical AI: Government agencies are leveraging AIP for national security, defense, and civilian mission applications
• Secure AI Deployment: Palantir’s security-first approach enables government customers to deploy AI in classified and sensitive environments
• Decision Support: AIP enhances decision-making capabilities for time-sensitive and high-stakes government operations
• Operational Efficiency: Government customers are using AIP to modernize legacy systems and improve operational efficiency

The platform’s impact extends beyond traditional analytics to enable autonomous decision-making, predictive insights, and real-time optimization. This capability is particularly valuable for customers operating in complex, dynamic environments where traditional decision-making processes are too slow or cumbersome to be effective.

AIP’s success is also driving Palantir’s competitive differentiation in the market. While many companies offer AI tools or analytics platforms, Palantir’s combination of data integration, security, and operational AI deployment creates a unique value proposition that is difficult for competitors to replicate. This competitive moat supports the premium pricing and strong margins that Palantir commands in the market.

Palantir provided highly optimistic guidance for both Q3 2025 and full-year 2025, reflecting management’s confidence in the company’s continued growth trajectory and market opportunity:

Q3 2025 Guidance

• Revenue expected between $1.083 – $1.087 billion, representing approximately 50% year-over-year growth
• Adjusted income from operations expected between $493 – $497 million
• This guidance represents the highest sequential quarterly revenue growth in company history

Full-Year 2025 Raised Guidance

• Revenue guidance raised to between $4.142 – $4.150 billion, representing at least 45% year-over-year growth
• U.S. commercial revenue guidance raised to in excess of $1.302 billion, representing at least 85% growth
• Adjusted income from operations guidance raised to between $1.912 – $1.920 billion
• Adjusted free cash flow guidance raised to between $1.8 – $2.0 billion
• Company continues to expect GAAP operating income and net income in each quarter

The guidance raises across all key metrics demonstrate management’s increasing confidence in the business trajectory. The 50% year-over-year growth expected in Q3 2025 represents an acceleration from Q2’s already impressive 48% growth, indicating that the company’s growth momentum is not only sustained but accelerating.

Particularly noteworthy is the U.S. commercial guidance of at least 85% growth for the full year, which reflects the continued rapid adoption of AIP in the commercial sector. This segment’s explosive growth is becoming an increasingly important driver of overall company performance and provides significant opportunities for continued expansion.

The raised adjusted free cash flow guidance to $1.8 – $2.0 billion demonstrates Palantir’s ability to convert revenue growth into substantial cash generation. This cash flow strength provides the company with significant strategic flexibility and supports continued investment in growth initiatives while maintaining industry-leading profitability.

Management’s confidence in maintaining GAAP profitability in each quarter underscores the sustainable nature of Palantir’s business model. Unlike many high-growth technology companies that sacrifice profitability for growth, Palantir continues to demonstrate that it can achieve both simultaneously, supporting its premium valuation and long-term investor appeal.

Palantir’s strategic initiatives focus on expanding its market reach, deepening customer relationships, and enhancing its technological capabilities to maintain its competitive leadership in the AI and data analytics market:

Platform Evolution and Innovation

• AIP Enhancement: Continued development of the Artificial Intelligence Platform to expand AI capabilities and ease of deployment
• Industry-Specific Solutions: Development of tailored solutions for specific industries and use cases
• Integration Capabilities: Enhanced ability to integrate with existing enterprise systems and third-party applications
• User Experience: Continued focus on making the platform more accessible to non-technical users

Market Expansion Strategy

• Commercial Acceleration: Aggressive expansion in the commercial sector, particularly in the United States
• International Growth: Selective expansion in international markets with focus on allied nations and strategic partnerships
• Channel Development: Build partnerships and channel relationships to accelerate market penetration
• Industry Vertical Focus: Deep penetration in key industries such as healthcare, financial services, manufacturing, and energy

Customer Success and Expansion

• Land and Expand: Focus on expanding existing customer relationships through additional use cases and deployments
• Customer Success Programs: Enhanced support and services to ensure customer success and drive expansion opportunities
• Training and Certification: Programs to develop customer expertise and increase platform adoption
• Community Building: Development of user communities and ecosystem partnerships

The company’s strategic focus on AI operationalization differentiates it from competitors who may focus on individual AI tools or capabilities. Palantir’s integrated approach, combining data integration, AI models, and operational deployment, addresses the complete AI lifecycle that enterprises need to realize value from their AI investments.

Palantir’s government heritage continues to provide competitive advantages in terms of security, reliability, and ability to handle complex, mission-critical applications. These capabilities translate well to commercial applications where similar requirements for security, reliability, and performance are increasingly important.

The company’s emphasis on demonstrable ROI and measurable business outcomes resonates strongly with customers who have experienced disappointing results from other AI initiatives. Palantir’s track record of delivering tangible value helps differentiate it in a crowded market of AI vendors and supports its premium pricing model.